GRP Limited: Navigating Headwinds with Strategic Resilience in Q3 & 9MFY26

GRP Limited, a prominent player in the polymer recycling sector, recently announced its financial results for the third quarter and nine months ended December 31, 2025 (Q3 & 9MFY26). The company demonstrated resilience amidst persistent macroeconomic and industry headwinds, maintaining topline stability and advancing strategic initiatives aimed at long-term sustainable growth. While challenges such as input cost inflation and project stabilization delays were noted, management's proactive measures and emerging market opportunities signal a cautious yet optimistic outlook.

For Q3 FY26, GRP Limited reported a consolidated total income of INR 135.2 crore, reflecting a marginal 2% year-on-year (YoY) growth. The nine-month period saw total income reach INR 393.0 crore, maintaining a stable level compared to the previous year. Consolidated EBITDA for Q3 FY26 stood at INR 11.2 crore, a 14% decline YoY, primarily impacted by higher raw material costs in the reclaim segment, a drop in plastics volumes, and fixed costs from a new plant operating at sub-optimal levels. Profit After Tax (PAT) for the quarter, excluding an exceptional item of INR 1.4 crore related to a new labour code provision, was INR 2.3 crore, down 49% YoY. For the nine-month period, adjusted PAT was INR 6.0 crore, a 47% decline YoY, influenced by flat volumes, increased raw material costs, and forex losses.

Segmental Performance and Strategic Focus

The company's performance was a mixed bag across its segments. The Reclaim Rubber (RR) business, while facing export challenges due to US tariffs, saw strong domestic performance. The strategic emphasis on non-tyre segments delivered tangible gains, with rubber consumption in these areas growing sharply, and GRP's market share improving by 3 percentage points. This contributed to a 14% YoY growth in domestic revenues during Q3, partially offsetting external demand pressures.

However, the non-reclaim portfolio, particularly the recycled polypropylene segment, faced headwinds. Softer plastics offtake, declining virgin prices, and increased competition from low-cost imports impacted volumes and margins. The Custom Die Forms business was also affected by US tariffs, and the company made a deliberate decision to discontinue contractual manufacturing in Polymer Composite to protect returns and reallocate capital to more sustainable growth areas. Income from the Pyrolysis and Crumb Rubber businesses, though in their stabilization phase, began to build, supported by sales of tyre pyrolysis oil and char to cement players and recovered steel to steel industries.

Financial Summary (Consolidated - INR Crore)

Strategic Initiatives and Future Outlook

GRP Limited is committed to its long-term strategy of building a fully integrated tyre recycling ecosystem. The company has announced a significant capital expenditure (capex) of up to INR 250 crore over three years. This investment will focus on deploying new technology for reclaim rubber with lower CO2 emissions, expanding capabilities in crumb rubber and other Tyre EPR-identified categories, and growing the plastic recycling business. As of Q3 FY26, INR 76 crore has been incurred towards projects for crumb rubber, tyre pyrolysis oil, and recovered carbon black, with units commencing operations in Q4 FY25 and Q2 FY26 respectively. The company has also secured a term loan of up to EUR 12 million from PROPARCO for partial project funding.

Management highlighted several positive developments that are expected to drive future performance. The recent reduction of US tariffs on Indian imports to 18% is a significant relief, anticipated to support volume recovery in exports. Additionally, the India-EU Free Trade Agreement presents a potential medium-term opportunity by enhancing the competitiveness of Indian tyre manufacturers. The company is also investing in solar energy, with an expected annual saving of INR 3-4 crore from Q2 FY27 and lower carbon emissions.

Sustainability and Innovation at Core

Sustainability remains a core pillar of GRP's strategy. The company is focused on reducing its environmental footprint through initiatives like Zero Liquid Discharge Operations and green tech investments. GRP has achieved 37% of its energy needs from renewable sources, leading to a 59% reduction in Scope 1 emissions and an 18% reduction in combined Scope 1&2 emissions per rupee turnover. The company aims to achieve 50% renewable energy by 2028, backed by investments in wind and biofuel systems.

GRP's in-house R&D capabilities are crucial for its innovation strategy, developing new grades of materials that enable customers to substitute virgin compounds and focusing on process innovations to minimize CO2 emissions. The company's commitment to sustainability is further reinforced by its consistent certification as a 'Great Place to Work' for the third time.

Concluding Thoughts

GRP Limited's Q3 and 9MFY26 performance reflects a period of strategic recalibration and disciplined execution amidst a challenging global environment. While project delays and market headwinds impacted short-term profitability, the company's focus on cost reduction, strategic capex, and leveraging emerging regulatory tailwinds positions it for gradual recovery and improved performance. The management's transparent acknowledgment of challenges and proactive measures to course-correct underscore a commitment to long-term value creation and sustainability.